<article><p class="lead">Indonesia is delaying implementation of its 40pc biodiesel blending (B40) programme indefinitely because of the coronavirus pandemic. Trials were due to begin in <a href="https://direct.argusmedia.com/newsandanalysis/article/2068602">March</a> with a roll-out planned for 2021. </p><p>The government is eager to push higher blending mandates to reduce reliance on expensive foreign oil and support the domestic palm oil industry that is facing <a href="https://direct.argusmedia.com/newsandanalysis/article/1958007">barriers</a> to export from the EU.</p><p>But the ministry of energy and mineral resources said that there are "still issues" with the current B30 programme that must be resolved before moving towards B40, although increasing the blending rate is still a working target. </p><p>Market participants have remained sceptical as to whether B40 was feasible for logistical and financial reasons. Indonesia needs 9mn t/yr of biodiesel to meet the B30 mandate but current capacity is just 11mn t/yr with around a 80-85pc utilisation rate, according to the Indonesian biofuel producers' association.</p><p>The current government subsidy mechanism is already <a href="https://direct.argusmedia.com/newsandanalysis/article/2091188">struggling</a> to prop up the current B30 programme as well, as palm oil premiums against gasoil (POGO) remain at three-year highs. The POGO is valued at $235.25/t despite narrowing on the back of crude gains this week.</p><p>No closures similar to what have been imposed in <a href="https://direct.argusmedia.com/newsandanalysis/article/2092047">Malaysia</a> because of the coronavirus have yet affected the Indonesian palm industry, although some measures such as social distancing are already in place at plantations, according to producers.</p><p class="bylines">By Lauren Moffitt</p></article>
